Wee Sing Co. conducts music classes for toddlers and their caretakers. Wee Sing Co. also runs birthday
Question:
Wee Sing Co. conducts music classes for toddlers and their caretakers. Wee Sing Co. also runs birthday parties for toddlers. Wee Sing Co. charges $300 to host a birthday party. When a customer purchases a birthday party, the customer also can keep the children's musical instruments that were used for free. Wee Sing Co. does not offer birthday parties without the musical instruments. Its cost per party is variable depending on the location of the party and music instructor. The same children's musical instruments could be purchased online for $24. A nearby competitor hosts children's birthday parties for $216. Wee Sing Co. and its accountants determine that, when a customer hires Wee Sing Co. to host a birthday party, the birthday party and the musical instruments are separate performance obligations.
For the purposes of revenue recognition, which method should Wee Sing Co. use to determine the standalone selling price of a birthday party and the musical instruments?